Chief Justice of India, D.Y. Chandrachud, emphasized that arbitration is now the preferred method for resolving commercial disputes. Despite high courts resolving 2.15 million cases and district courts handling 44.70 million cases in 2023, Indian courts remain overburdened. Arbitration offers a more efficient and effective alternative. This trend reflects a broader global move towards alternative dispute resolution.
New Delhi: Chief Justice of India (CJI) Dhananjaya Y Chandrachud emphasized the crucial importance of arbitration in the field of commercial justice. He asserted that arbitration no longer just an alternative, but has become the preferred method for dispute resolution.
The CJI stressed that arbitration must be guided by considerations of public policy, which empowers courts to intervene when necessary to prevent injustice. This ensures that the arbitration process remains fair and just.
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In his address at the Supreme Court of the United Kingdom on Thursday evening, the CJI highlighted the significant evolution of arbitration,
“What was once a supplementary dispute resolution mechanism has now become the primary choice for commercial entities worldwide.”
The judge emphasized,
“Arbitration is no longer merely an ‘alternative’; it has become the favored approach for achieving commercial justice,”
The judge further explained that this shift is motivated by parties’ preference to avoid domestic court systems and resolve their disputes with the help of an impartial, third-party arbitrator.
In a historic gesture, Lord Reed, President of the UK Supreme Court, granted Justice Chandrachud the rare honour of sitting in the President’s seat during his speech. This act symbolized the profound respect and solidarity between the judiciaries of the two nations.
The event, held last evening, attracted a distinguished audience of legal luminaries and arbitration experts from across the globe.
During his address, the Chief Justice of India highlighted the heavy burden on Indian courts, noting that high courts resolved 2.15 million cases and district courts handled 44.70 million cases in 2023.
He stated,
“These statistics demonstrate the confidence that the people of India have in their judiciary… Every individual seeking justice from the judiciary has the right to a fair remedy. In addressing these grievances, Indian courts are simply fulfilling their constitutional duty. Our broad jurisdiction was intended to provide the widest possible access to justice. However, not every dispute needs to be resolved in court, as alternative dispute resolution methods like arbitration and mediation are increasingly being embraced,”
According to Justice Chandrachud, the Indian Constitution‘s liberal democratic values permit individuals to find personalized solutions to their legal issues outside the judicial system, as long as these solutions adhere to established laws. Arbitration is one such alternative method of dispute resolution.
He noted that the democratization of the political arena, improved access to public institutions, and the liberalization of commerce have allowed private entities to engage within a framework of ordered liberty. This system, governed by the rule of law, ensures a level playing field for all parties, regardless of their status or hierarchy.
Justice Chandrachud stated,
“Arbitration offers a level playing field outside the domestic court systems, I firmly believe that it is time for countries like India to rise to the occasion and foster a culture of commercial arbitration. A strong institutionalization of arbitration will advance this culture in the Global South. Arbitral institutions should be transparent, accountable, and technologically advanced while also promoting greater diversity, including gender diversity and representation from the Global South, to ensure a broad-based process.”
In his address, Chief Justice Chandrachud highlighted the critical role of public policy in guiding arbitration processes and the enforcement of arbitral awards. He explained that while arbitration allows for autonomy and flexibility, it must align with the fundamental principles of justice and fairness, which are core to public policy.
Promoting a balanced approach where judicial oversight ensures fairness without compromising the autonomy of arbitration, he asserted,
“Domestic courts should adopt a pro-arbitration stance and restrict their intervention to the specific grounds outlined in the New York Convention,”
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards establishes a framework for recognizing and enforcing arbitral awards across different jurisdictions. Both the UK and India are signatories to the Convention, and their domestic arbitration laws in harmony with its provisions.
Additionally, Justice Chandrachud discussed the essential function of courts in preventing and remedying injustices within the arbitration system.
He emphasized,
“To make arbitration efficient by minimizing delays, the law must guarantee that the adjudication of substantive legal rights of all parties, including non-signatories closely linked to the underlying contract, is encompassed within arbitration, This approach will prevent ancillary litigation by non-signatories and help arbitration retain its credibility within domestic legal systems.”
The Chief Justice of India (CJI) emphasized the importance of judicial intervention in exceptional cases to preserve the integrity of the arbitral process and protect against procedural and substantive injustices. Referring to a well-known statement by the UK judge Lord Burrough in the 19th century, where he likened public policy to an “unruly horse,“ Justice Chandrachud stressed that it is this “unruly horse” that allows courts to intervene and rein in injustice after an arbitral award has been granted.
Chief Justice Chandrachud stated,
“The intervention of courts in situations where an arbitral award causes significant injustice is crucial for upholding the rule of law, If judges do not intervene when the arbitration process is undermined by issues such as fraud, the credibility and legitimacy of the arbitration system could be severely compromised.”
Justice Chandrachud concluded by strongly endorsing arbitration as the primary method for resolving commercial disputes, while also setting a progressive agenda for arbitration practices. He emphasized the importance of maintaining procedural autonomy and adhering to public policy principles to ensure justice and fairness.
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